5 Reasons Why Your Business May Need a Fractional Virtual CFO

The Chief Financial Officer (CFO) is a critical member of a company’s executive team. The CFO develops the company’s financial strategy, manages financial risks, and performs duties such as tracking cash flow.

Hiring a CFO may seem like a logical step for companies that require financial management. However, hiring a full-time CFO isn’t necessarily best for all companies. A fractional virtual CFO might be a better choice.

In this guide, we discuss the role of a fractional virtual CFO as well as the reasons why you might need one for your business. Of course, we’ll also share the benefits of adding a fractional virtual CFO to your executive team.

What Is a Fractional Virtual CFO?

A fractional virtual CFO is a CFO that supports your company remotely on a part-time basis. The remote work environment enables you to hire the right talent for your company instead of hiring the best you could find in the local market.

What Does a Fractional Virtual CFO Do?

Fractional virtual CFOs typically focus on higher-value tasks such as strategy and financial growth. For example, instead of just closing your books each month, they also spend time analyzing your cash flow, reporting on financial key performance indicators (KPIs), and ensuring you’re meeting your monthly goals.

Fractional virtual CFOs are best viewed as strategic partners. Not only do they develop financial strategy, but they also ensure the other members of your executive team and employees understand financial goals and their part in reaching them. In other words, they facilitate the conversations that ensure everyone is on the same page and working to move business forward.

5 Reasons Why Your Business May Need a Fractional Virtual CFO

Not every business requires the support of a full-time CFO. If you’re not sure if a full-time CFO is right for you, here are five reasons why you might consider a fractional virtual CFO instead.

Cost

According to Payscale, the average annual salary for a CFO is $140,603. However, salary costs vary based on local markets and other factors. Salaries can range to over $200,000 per year and beyond.

You may not have the resources required to hire and retain a full-time CFO. This is often the case for startups and small to medium-sized businesses. Here at BGM, we find that most companies need an annual revenue of $25 to $30 million before hiring a full-time CFO.

Low Financial Activity

While there will always be a need for basic accounting, other transactional financial activity may ebb and flow. For example, you may go through a season of acquisitions, re-financing, and other transactions that require full-time, hands-on assistance.

However, when financial activity slows, you may no longer need full-time support. You can save resources by opting for a fractional virtual CFO instead. A fractional virtual CFO delivers the flexibility you need to scale financial support up or down based on your needs.

Interim Support

Perhaps you’re in the recruiting stages of hiring a full-time CFO. However, financial needs don’t stop when you’re in the in-between. A fractional virtual CFO can step in during the interim and provide necessary support until you onboard your new CFO.

Part-time support ensures you continue moving toward your goals and remain in compliance during the transition.

Loss of Accounting Efficiency

Some businesses in growth mode find that they don’t have the time to dedicate to financial strategy or accounting. Unfortunately, this can lead to consequences such as unoptimized cash flow, potential compliance concerns, and poor tax planning.

If accounting procedures are falling through the cracks or you lack a clear financial strategy, it might be time to hire a fractional virtual CFO. A CFO can improve your accounting efficiency and keep you on track toward your goals.

Lack of Knowledge

Many businesses may understand how to complete their billing and basic accounting processes. However, financial strategy is complex and many business owners experience a knowledge gap when it comes to developing goals and analyzing progress.

Fractional virtual CFOs are knowledgeable individuals and well-versed in finance. They can fill gaps in your current financial processes. Plus, many fractional virtual CFOs specialize in specific industries. This means you can source a CFO with in-depth experience in your niche.

The Additional Benefits of Hiring a Fractional Virtual CFO

Hiring a fractional virtual CFO is a cost-effective way to improve your company’s finances. A fractional virtual CFO brings niche-specific knowledge and experience to the table as well as the flexibility and efficiency you need to scale.

That’s not all. Hiring a fractional virtual CFO allows you to:

• Focus your efforts elsewhere: A fractional virtual CFO can take all of the complex financial and accounting work off your plate. As a result, you can focus your efforts on other critical tasks.
• Make strategic financial decisions: A fractional virtual CFO that understands your industry, business, and goals is an excellent resource when making business decisions. Considering a new product line? About to go through a merger or acquisition? A fractional virtual CFO can ensure you understand the financial implications of these decisions on your business.

Looking for Outsourced Accounting Services? Reach Out to BGM Today.

At BGM, we offer outsourced accounting services, including fractional virtual CFO services to businesses of all sizes. Whether you’re a startup without any financial experience or a business with an in-house team, we’re here to support you where you need us.

To learn more about our accounting services, give us a call today at 651-227-9431 or send us a message.